After SEC review of reporting of long-term 'warranties', LCA-Vision,
which operates 63 Lasik clinics under the LasikPlus name, restates
earnings for 2002-2006 reducing revenues by $48.9 million and reducing
retained earnings by $27.4 million.

CINCINNATI, May 8 /BUSINESSWIRE/ LCA-Vision, operating a chain of Lasik clinics under the LasikPlus brand, today announced that it has filed with the Securities and Exchange Commission (SEC) an amended earnings from 2002 to 2006 effecting a reduction in revenues of $48.9 million and a reduction in retained earnings of $27.4 million. LCA-Vision operates 63 LasikPlus vision correction centers in 48 markets in 29 states.

On March 9, 2007, LCA-Vision received a comment letter from the SEC related to a staff review of its 2006 Annual Report on Form 10-K. The single issue raised in this letter addressed the Company's revenue recognition policy regarding services provided subsequent to the initial surgical procedure. In most cases, LCA-Vision's base price laser vision correction surgery includes a one-year acuity program, which will cover the cost of post-surgical enhancements should the patient not achieve the desired visual correction during the initial procedure. In addition, LCA-Vision offers its patients the option to purchase a lifetime acuity plan. The majority of LCA-Vision patients purchase the lifetime acuity program.

The Company's historical accounting policy had been to defer revenues for separately priced extended warranties for those patients expected to receive treatment under the warranty. Historical data indicates that approximately 7% of patients received treatment under the warranty. The accounting for separately priced extended warranties is subject to Financial Accounting Standards Board (FASB) Technical Bulletin 90-1 (FTB 90-1), Accounting for Separately Priced Extended Warranty and Product Maintenance Contracts.

Following receipt of the SEC staff comment letter and upon further examination of the manner in which the Company has historically accounted for the revenues associated with the lifetime acuity program, LCA-Vision determined that its accounting for deferred revenues was not appropriate under FTB 90-1 and resulted in an overstatement of revenues. Under FTB 90-1, 100% of revenues from separately priced extended warranties are to be deferred and recognized over the life of the contract on a straight-line basis unless the Company has sufficient experience to indicate that the costs to provide the service will be incurred other than on a straight-line basis.

The Company has sufficient experience to support that future enhancements will be incurred on other than a straight-line basis. Accordingly, LCA-Vision has restated its results to reflect the deferral of revenues associated with its lifetime acuity program as a separately priced extended warranty under FTB 90-1. LCA-Vision recognized these deferred revenues in its restated results over the periods in which the future costs of performing the enhancement procedures are expected to be incurred. Because the Company's base price generally included the right to enhancements in the first year, LCA-Vision recognizes these deferred revenues based on historical enhancement rate patterns with amortization beginning after the first anniversary of a patient's surgical date. Under the historical pattern, approximately 51% of the deferred revenue will be recognized in the second year after the patient's initial surgery. The following table highlights the amortization rates in each successive period:

In addition to the deferral of revenues under FTB 90-1, LCA-Vision is also deferring a portion of its costs of service related to professional fees paid to the attending surgeon. Professional fees are earned when a procedure is performed. The physician receives no incremental fee for an enhancement procedure. Accordingly, a portion of the professional fee paid to the physician relates to the future enhancement procedures to be performed and qualifies for deferral under FTB 90-1 as a direct and incremental cost of the warranty contract. LCA-Vision will use the same historical experience to amortize the deferred revenue and the deferred professional fees.

_________________We can easily forgive a child who is afraid of the dark. The real tragedy of life is when men are afraid of the light. -Plato

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